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Founded by a pair of top lawyers in 2001, LeClair Thibeault provides tailored legal solutions to demanding clients for both residential and commercial matters.

New Home Warranty Or New Home Beware-enty?

There is a shortage of homes for resale in Calgary and throughout Alberta and prices are increasing. In the face of this situation, more people are turning to building or purchasing new homes as builders rush to fill the void of supply. As a Buyer, you then get to face the issue of what a new home warranty is.

Understanding Changes

A number of years ago we posted an article on concerns with new home warranty providers. Since that article was first published there have been a few changes in the new home industry that require a revisit to that article to update it. The most important changes that need to be taken into consideration are:

  • There were some significant amendments to the Alberta New Home Warranty Act that focused mostly on licensing of builders; and
  • There have been new companies that have entered the market to provide warranties.

Challenges In New Home Warranties

In the original article, we focused on the particular issue that certain warranty programs did not cover deficiencies that were discovered or ought to have been discovered at the time of closing. In fact, the warranties specifically directed that those deficiencies were to be dealt with as between the Buyer and their Builder. The Buyer was normally completely unaware of that fact.

By way of background, there are currently seven providers of new home warranty protection in Alberta. In alphabetical order they are:

  • Alberta New Home Warranty Program
  • Blanket Home Warranty Ltd.
  • Millennium Insurance Corporation
  • National Home Warranty Group Inc.
  • Progressive Home Warranty Ltd.
  • Travelers Insurance Company of Canada
  • WBI Home Warranty Ltd.

The Importance Of Being Informed & Protected

Fast forwarding to today, a review of their various policies indicate that there are some significant differences in their interpretation of what is or is not a covered deficiency at closing. In some cases, the very deficiencies you identify on your final walk-through with your builder are not covered at all and you will be shocked to learn down the road that you are left on your own with no coverage if the builder does not complete or rectify those issues.

The other important issue is that your new home warranty may not cover your new detached garage as it is a “permitted exclusion” under the act. To point to the lack of logic on this issue, if your garage is attached it cannot be excluded. Imagine your surprise to learn that the garage you love has significant structural issues only to learn you have no protection or coverage that you had anticipated?

Needless to say, new home warranty is not a perfect solution in any way but understanding the limitations of the program your builder has enrolled your property in and the issues that it creates are an important matter for you. In every situation, it is important to read the exclusions in the new home warranty policy before signing a contract to purchase a new home that is either to be built, is in the process of being built or is ready to move in.

If you are dealing with the Builder’s salesperson, demand a copy of the warranty and the exclusions. If you are dealing with your own Realtor, demand that they request this information and at a minimum make the review of it to your satisfaction a condition of your purchase.

Or better yet, know that hiring an experienced real estate lawyer before signing a purchase agreement with a Builder is not only sound advice, it really is the only new home “warranty” insurance you have.

For more information regarding real estate law, we are Calgary’s leading legal real estate team to help you. Contact us today, 403 245 – 3500, or email us at info@calgarylaw.com.